KUALA LUMPUR: The possibility of Malaysia going bankrupt like Sri Lanka is very slim, the Dewan Rakyat heard today.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the International Monetary Fund (IMF) never reported that Malaysia was facing woes that would cause the country to go bankrupt, instead it was confident in the prospect of Malaysia’s economic growth.
“In April this year, the IMF expressed its confidence that our gross domestic product (GDP) will grow at a rate of 5.75 per cent.
“If we compare our economic indicators to Sri Lanka, it is clear that our economy is far much stronger than theirs.
“The possibility of Malaysia going bankrupt like Sri Lanka is very low.”
He said this in response to a supplementary question from Datuk Seri Ahmad Maslan (Barisan Nasional-Pontian), who had asked the minister to clarify claims that had gone viral on social media that Malaysia would end up bankrupt like Sri Lanka, based on current national debt.
Tengku Zafrul also assured that the government would continue to be prudent in managing the country’s debts and finances.
Malaysia’s ability to borrow more money to help the people, he added, was not based on the current amount of national debt.
“There are quarters who say Malaysia’s debt to GDP ratio, which is at 63 per cent, is still low compared with developed countries like Japan at 263 per cent, Singapore at 133 per cent.
“The ability of a country to increase borrowings does not solely depend on the debt ratio against the GDP, but also debt affordability and debt sustainability,” he said.
He added that Malaysia’s debt service ratio was currently at 16.3 per cent and was expected to rise to more than 18 per cent this year.
“This means that for every ringgit in revenue the government collects, almost 20 sen will be used to service the debt interest, not including the principal sum.”
The figure was much higher than the debt service ratio of the United States, the United Kingdom and Japan, he added.
“On average, the tax-to-GDP percentage ratio is 33 per cent.
“So although the country’s economy has improved in 2022, the growth does not add to more revenue for us to have more debt.”